Quantum Finance Solutions Glossary

 

Acceleration Clause

 

Allows the lender to speed up the rate at which your loan comes due or even to demand immediate payment of the entire balance of the loan should you default on your loan.

 

Agreement of sale

 

Know by various names, such as contract of purchase, purchase agreement, sales agreement or contract of sale according to location or jurisdiction. A contract in which a seller agrees to sell and a buyer agrees to buy, under specific terms spelled out in writing and signed by both parties.

 

Amortization

 

Loan payment calculated to pay off the debt at the end of a fixed period, including interest on the outstanding balance.

 

APR

 

Annual Percentage Rate. A method of calculating the cost of credit over the life of the loan. The percentage results from an equation considering the total amount financed, the finance charges, and the term of the loan. Usually not the same as the interest rate.

 

Application

 

The information you provide to us in order for us to assess what we can offer you.

 

Appraisal

 

An estimate of the value of property, made by a professional appraiser.

 

Asset

 

Property, money or goods you own from which a benefit can derive.

 

Arrears

 

An amount of money, that has not been paid on time. When this occurs your loan will be in arrears and eventually if it stays in arrears you will be charged late fees.

 

Balance

 

The balance on a loan account is the amount remaining to be paid back.

 

Balloon Payment

 

A large payment due at the end of the loan. Using a balloon payment, the individual monthly repayments are reduced.

 

Bank

 

A financial institution authorised under the 1959 Banking Act which offer a variety of financial products and services.

 

Bankruptcy

 

A legal process affecting individuals who are unable to pay their debts. A bankrupt person will need to hand over required assets to a bankruptcy trustee who then sells his assets to pay outstanding creditors. A bankruptcy will last for 3 years and you cannot borrow more than approx $4000 within those 4 years from a financial institution. This rule is in place but generally no financier will provide finance to a current bankrupt. Once individual has completed 3 years the bankruptcy will be discharged and then the individual is eligible to borrow funds that will most probably come through Non-conforming lenders.

 

Beneficiary

 

An individual or organisation that is entitled to receive the benefits generated by an asset which is legally registered in the name of another party, such as a trustee.

 

BFSO(Banking and financial services Ombudsman)

 

An independent dispute resolution service that handles consumer complaints about Australian banks and other financial services organisations.

 

Bill Of Sale

 

A document that shows the details of a sale. Your dealership will prepare a bill of sale to document your purchase.

 

Broker

 

A individual in the business of assisting in arranging finance or negotiating contract for a client but who does not loan the money himself.

 

Break Costs

 

A charge that will be charged to the client from the financier when the client wants to finalise the loan before the due date.

 

Certificate of title

 

A Certificate issued by a title company or a written opinion by an attorney that the seller has good marketable and insurable title to the property which he is offering for sale.

 

Capital

 

Capital is the value of an asset.

 

Capital gain

 

Capital gain is the profit that you where able to achieve through buying and then on-selling the asset at a higher price than what you paid for it.

 

Collateral

 

Property offered to support a loan that can be seized if you default.

 

Commission

 

Money paid to an authorised broker/agent by the seller as compensation for finding a buyer and completing the transaction.

 

Commitment

 

An agreement, usually in writing, between a lender and borrower to loan money at a future date subject to the conditions stipulated on the agreement. EG Subject to finance.

 

Compound interest

 

A interest method that calculates interest on interest earned in prior periods.

 

Car Loan

 

A car loan is a finance product for a motor vehicle.

 

Car finance

 

Car finance is what we specialise in at Quantum Finance Solutions. We have the cheapest rates in the market and provide the fastest service.

 

Car insurance

 

Car insurance is a form of in insurance for your motor vehicle. It is compulsory for a vehicle to have a 12 month policy on it before Quantum finance solutions can finalise the car finance.

 

Car Discount

 

A car discount is a price that you pay which is below the RRP of the vehicle. This is not an unusual occurrence. In the past we have financed vehicles at a wholesale price or just below the RRP. Quantum finance solutions can locate a vehicle for you anywhere across Australia. We have a large network throughout the country, which consist of wholesalers and car dealers and in most cases we will be able to save you thousands on the purchase price. Please ask one of our car finance consultant if you are interested in this service.

 

Chattel Mortgage

 

A chattel mortgage is a commercial facility that best suits a business that will be using the vehicle, equipment etc for predominately business purposes. . It has the benefit of immediate ownership and has the benefit of being able to claim back the GST within the BAS period of the purchase. A balloon can be set up with this facility. The balloon amount will generally depend on the risk and the age of the vehicle being purchased.

 

Commercial Hire Purchase

 

A commercial hire purchase also known as a CHP is a finance product for Auto, plant and equipment. With a HP the goods are owned by the financier and the customer hires the goods over the repayment term until the last repayment is made. Upon receiving the last repayment a transfer of title will take place.

 

Cleared funds

 

Cleared funds are funds that have been cleared by the institution they were sent to and now available to access. To clear funds it can take anywhere from 24 hours to 5 days.

 

Co-borrower

 

An individual who borrows money with you. A second applicant. Each individual on the loan agreement is jointly and separately responsible to repay the loan back. Both applicants bear 100% of the risk and if one decides not to pay then the other applicant will need to cover the full amount owing, for the co-borrower.

 

Comparison rate

 

A comparison rate is a tool to help identify the true cost of a loan. It is a rate which includes the interest rate, fees and charges relating to the loan, reduced to a single percentage figure. For example, a bank’s advertised interest rate may be 5.49% and it’s comparison rate is 6.75%.

 

Consumer

 

A consumer is a person who buys a product or uses a service.

 

Contract

 

A legally binding agreement between parties involved.

 

Credit

 

Credit is money advanced from a lending institution to a client.

 

Credit file

 

A credit file is a file that holds records of your credit history. In Australia the biggest credit reporting agency is Veda Advantage(formally Baycorp advantage) which is then followed by Dun and Bradstreet. Defaults, bankruptcies, court judgement, Date of Birth, Address, Name and credit enquiries is information that you will find on a credit file. A credit file aids the lender when assessing an applicant’s worthiness for credit.

 

Credit union

 

A co-operative organisation that provides loans to its members.

 

Creditor

 

A creditor is someone who is owed money.

 

Debenture

 

A debenture is a certificate of agreement of loans which is given under the company’s stamp and carries an undertaking that the debenture holder will get a fixed return from interest and the principle amount whenever the debenture matures. A debenture is a long term debt instrument used mainly by governments and large companies to obtain funds. It is defined as “a debt secured only by the debtor’s earning power, not by a lien on any specific asset”.

 

Debit

 

A debit is a withdrawal from a bank account.

 

Debtor

 

A debtor os someone who owes money

 

Default

 

A default occurs when someone does not pay back their debt. The default will get listed on the credit file and will stay on the file for a period of 5 years. A default will affect the availability of new credit for a borrower.

 

Default Rate

 

A default rate is charged when payments are not made. A default rate will be charged until client is back up to date with the repayments.

 

Deposit

 

A deposit is money that is put down to complete a transaction, to secure the purchase or cash put into a bank account.

 

Depreciation

 

The writing down of the cost of an asset.

 

Encumbrance

 

A legal right of interest in land that affects a good or clear title, and diminishes the lands value. It can take numerous forms, such as zoning ordinances, easement rights, claims, mortgage, liens, charges, a pending legal actions, unpaid takes, or restrictive convenants. An encumbrance does not legally prevent transfer of property to another. A title search is all that is usually done to revel the existence of such encumbrances, and it is up to the buyer to determine whether he wants to purchase with the encumbrance, or what can be done to remove it.

 

Equity

 

Equity is the difference between an assets current market value and any debt against it. Basically to work out how much equity you have in your asset, deduct the owing amount by the assets value and the remaining figure is your equity.

 

Finance charge

 

The total amount credit will cost.

 

Fixed Rate

 

An interest rate that is agreed upon and fixed when signing a loan agreement. The fixed rate will stay fixed at that rate for the length of that agreement, regardless of the interest rate fluctuations in the market.

 

Fleet discount

 

A discount may be given on new car purchases however it all depends on the volume the business purchases.

 

Fully maintained Novated Lease

 

A fully maintained novated lease is when the leasing company covers all the maintenance costs of the vehicle.

 

Fixed term deposit

 

Money deposited into a bank or financial institution for a fixed period at a pre-agreed rate of interest.

 

Gearing

 

The ratio of your money versus borrowed money in an investment.

 

GST (Goods and Services tax)

 

A tax implemented on the supply of goods and services.

 

Guarantor

 

A guarantor is someone who has legally agreed to be responsible for another parties debt if the other party cannot produce the money to pay for the debt in full.

 

Income

 

Income is money that you earn through work, investments, interest etc.

 

Input tax credit

 

Input tax credit is when you pay GST on taxable supplies for use in your business, you can usually claim these amounts back from the tax department.

 

Interest

 

Fee paid for using other people'smoney. To the borrower it is the cost of renting money, to the lender the income from renting (lending) it out. Interest on all debt (called 'cost of debt servicing') is normally deductible before taxes are assessed on a firm's income.

 

Interest in advance

 

It’s when interest is charged at the beginning of a period of time. Normally available for investment purposes only.

 

Invoice

 

Invoice is a bill issued to a client for the goods or services they have bought.

 

Legal entity

 

Association,corporation, partnership,proprietorship, etc., that has legal standing in the eyes of law. A legal entity has legal capacity to enter into agreements or contractsassumeobligations,incur and paydebts, sue and be sued in its own right, and to be held responsible for its actions.

 

Loan

 

Money that is lent to a person at a cost (interest).

 

Loan Agreement

 

A legally binding contract between the borrower and the lender. The agreement will state all the terms and conditions of the loan.

 

Low-Documentation loan

 

A low-doc loan is a loan facility provided for self-employed people who cannot provide financial statements to obtain a loan.

 

Lump sum payment

 

A lump sum payment is a large once off payment put forward to your loan on top of your regular repayments. It’s a great way to reduce the principle, pay out your loan sooner and get charged less interest.

 

Margin

 

The difference between cost of money for the lender and the rate the client pays.

 

Mutual fund

 

A mutual fund is a professionally managed pool contributed by private investors and then re-invested in a range of securities for a profit.

 

Net worth

 

Assets - liabilities = Net worth

 

Novated lease

 

A Novated lease is an agreement between the employer, employee and financial institution. With Novated lease the employer agrees to pay the repayments and manage the repayments while the employee remains employed within the organisation. The employee then sacrifices part of the employees salary to cover the cost of the finance.

 

Operating lease

 

Cancelable short-term (a period shorter than the economic life of the leased asset) lease written commonly by landlords and equipmentmanufacturers who expect to take back the leased asset after the lease term and re-lease it to other users. The lessor gives the lessee the exclusive right to possess and use the leased asset for a specific period and under specified conditions, but retains almost all risks and rewards of the ownership>. The full amount of lease payments is charged as an expense on the lessee'sincome statementbut no associated asset or liability (other than the liability of the accrued lease payment or rent) appears on the lessee's balance sheet. For this reason, operating leases are also called offbalance-sheetfinancing. And, since the maintenance of the leased asset is usually theresponsibility of the lessor, they are called also maintenance leases or service leases. An operating lease does not meet any of the criteria for a capital lease.

 

Original documents

 

Paperwork or documents that display original signatures.

 

Overdue

 

Outstanding amount of money that is owed is defined as overdue.

 

PA

 

Per annum! One year!

 

PAYG

 

(Pay as you go) PAYG is a system of withholding money for income tax.

 

Personal loan

 

A personal loan is provided to a client for personal purposes like car, holiday, boat, home renovations etc. A personal loan if it is unsecured will generally have a higher interest rate because the risk involved is higher than if it was secured. Rates are fixed and loan terms vary between 3-7 years.

 

Positive gearing

 

Positive gearing occurs when money is borrowed for an investment and then that investment generates enough income to cover the borrowed funds repayment and expenses plus also provide the investor with an income.

 

Periodical payment

 

A series of payments from an account made weekly, fortnightly, monthly, quarterly or annually.

 

Pre-approval

 

A pre-approval is an approval based on preliminary information provided. It allows a borrower to gain an insight to how much they can borrow once all conditions of approval have been met.

 

Principle

 

The amount of debt, not counting interest, left on a loan.

 

Private Sale

 

A private sale is a sale of property or vehicle directly from the owner.

 

Receipt

 

Evidence that a payment has been made. A receipt will be issued to the client upon payment to acknowledge payment being received.

 

Redraw facility

 

A redraw facility allows extra repayments to be made on to the loan with out penalty.

 

Reducible interest

 

Loan interest that is calculated on how much you owe each day. As the amount you owe gets less you pay less interest.

 

Refinancing

 

Paying off an existing loan with the proceeds from a new loan, usually to obtain a lower interest rate or to consolidate debts into one loan.

 

Render
To present a bill for payment.

Repossession
A creditor may obtain the legal right to reclaim the goods for which an agreement was made if the creditor fails to make the payments or meet the terms of the loan or financial agreement.

Risk
When lending money, a risk grade is calculated in order to assess how secure a loan or investment is likely to be. The higher the risk grade associated with the borrower, the higher the interest charged by lending organisations.

Savings
Money that someone puts away for use at a later time. For example, a person may save for to buy a car in the future.

Servicing
Servicing is worked out by calculating your income versus you expenses and then assessing if servicing of a loan facility is possible.

Settlement date
A settlement date is the date that your loan will settle and you take possession of the asset being financed.

Statement
A record summarising all the transactions of an account and any fees charged or interest paid over a given period. Depending on the type of account, a person might receive statements monthly, quarterly or less frequently.

Stamp duty
At tax imposed on states and territories on a range of paper and electronic transfers. These taxes vary across states and territories. Taxable transactions include motor vehicle registration and transfer, insurance policies, leases and mortgages, hire purchase agreements, transfers of property(such as businesses, real estate or shares.

Salary Packaging
Salary Packaging is an Australian Taxation Office (ATO) approved means of getting your employer to restructure your income so you can have a salary working for you. .Salary Packaging involves restructuring your salary by choosing to receive your salary as a combination of cash and approved fringe benefits that are paid out of your pre-tax salary.
Employees can customise their Salary Package by choosing benefits that best suit their individual needs. Salary Packaging provides individuals with the option of including a range of benefits that offer both convenience and the advantage of using their income more effectively. The benefits are generally tax free or taxed a concessional rates. This is an advantage to an employee because it allows them to reduce their taxable income and increase their take home pay.

Secured car loan
A secured car loan is a car finance product that takes security over the vehicle.. The loan is secured which gives the client a lower interest rate.

Tax file number

 

A tax file number is an 8 or 9 digit number issued by the Australian Taxation Office to each taxpayer (individual, company, superannuation fund, partnership or trust) to identify their Australian tax dealings.

Term
The period of time a deposit is to be held or over which a loan must be repaid.

Title
A document that gives evidence of an individual’s ownership of property

Terms and conditions
Opening an account means, in effect, that a contract has been entered into with a financial organisation and that a series of terms and conditions are agreed to. These outline how the account can be used. Terms and conditions are available from any financial organisation.

Trade-in-Value
The value of a used vehicle that you trade in to a dealership as part of a purchase

Transactions
The name given to activities, such as making deposits and withdrawals or transferring money from bank accounts.

Transfer
To move money from one account to another account.

Trust
An entity created to hold assets for the benefit of certain individuals or groups and managed by a trustee.

Trustee

 

A party who is given legal responsibility to hold property in the best interest of another, The trustee is one placed in a position of responsibility for another, a responsibility enforceable in a court of law.

Unsecured Loan
A unsecured loan is a personal finance product that can be used for anything you like. Because the funds are unsecured the risk is higher so therefore the interest rate is higher.

Variable Interest
A type of interest where the rate may go upand/or down during the term of the loan.

Withdrawal
To take money out of an account. For example, using an ATM, EFTPOS or by cheque.